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The Determination of the Equilibrium Exchange Rate in a Simple General Equilibrium Model

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  • Cuong Le Van

    (CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain = Catholic University of Louvain)

  • Cécile Couharde

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

  • Thai Bao Luong

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

Abstract

In this article, we develop an analytical general equilibrium model of the equilibrium exchange rate. This theoretical framework allows us to identify the relevant set of variables which determinate the equilibrium exchange rate and to explore how theses variables influence the trajectory of the equilibrium exchange rate.

Suggested Citation

  • Cuong Le Van & Cécile Couharde & Thai Bao Luong, 2004. "The Determination of the Equilibrium Exchange Rate in a Simple General Equilibrium Model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-03331130, HAL.
    • Handle: RePEc:hal:cesptp:halshs-03331130
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03331130
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    References listed on IDEAS

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    1. Didier Borowski & Cecile Couharde, 2003. "The Exchange Rate Macroeconomic Balance Approach: New Methodology and Results for the Euro, the Dollar, the Yen and the Pound Sterling," Open Economies Review, Springer, vol. 14(2), pages 169-190, April.
    2. Hamid Faruqee, 1995. "Long-Run Determinants of the Real Exchange Rate: A Stock-Flow Perspective," IMF Staff Papers, Palgrave Macmillan, vol. 42(1), pages 80-107, March.
    3. Mr. Peter Isard & Mr. Hamid Faruqee, 1998. "Exchange Rate Assessment: Extension of the Macroeconomic Balance Approach," IMF Occasional Papers 1998/012, International Monetary Fund.
    4. John Williamson, 1994. "Estimating Equilibrium Exchange Rates," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 17, January.
    5. De Gregorio, Jose & Giovannini, Alberto & Wolf, Holger C., 1994. "International evidence on tradables and nontradables inflation," European Economic Review, Elsevier, vol. 38(6), pages 1225-1244, June.
    6. Virginie Coudert & Cécile Couharde, 2003. "Exchange Rate Regimes and Sustainable Parities for ceecs in the Run-up to emu Membership," Revue économique, Presses de Sciences-Po, vol. 54(5), pages 983-1012.
    7. Cécile Couharde & Virginie Coudert, 2003. "Exchange Rate Regimes and Sustainable Parities for CEECs in the Prospect of joining the EMU," Post-Print halshs-00119109, HAL.
    8. Simon Wren-Lewis & Rebecca Driver, 1998. "Real Exchange Rates for the Year 2000," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa54, January.
    9. William Ellery Channing, 1994. "Change," American Journal of Economics and Sociology, Wiley Blackwell, vol. 53(1), pages 15-15, January.
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    Cited by:

    1. Jean-Michel Grandmont, 2013. "Tribute to Cuong Le Van," International Journal of Economic Theory, The International Society for Economic Theory, vol. 9(1), pages 5-10, March.

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    More about this item

    Keywords

    equilibrium exchange rate; purchasing power parity; Balassa-Samuelson effect; general equilibrium model; taux de change d'équilibre; parité de pouvoir d'achat; effet Balassa-Samuelson; modèle d'équilibre général;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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